Legal

New York Regulator Fines Pakistani Bank $630M

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The New York State Department of Financial Services (DFS) is looking to fine Habib Bank Ltd (HBL) nearly $630 million for failing to comply with state and federal laws at its only U.S. branch.

Reuters reported news that if the fine is imposed, it would be the largest ever faced by a Pakistani bank. The New York State Department of Financial Services could not immediately be reached for comment.

U.S. federal and state laws require financial institutions to set policies and procedures to detect and prevent illicit money transfers, including screening customers and reporting suspicious transactions to regulators. In addition, New York State passed strict anti-money laundering regulations in 2015, such as requiring a bank’s chief compliance officer to certify whether it upholds the systems outlined in the rule.

The compliance issues for Habib Bank go back to 2015, when the DFS “identified significant breakdowns” in the bank’s anti-money laundering compliance. It was not revealed what those breakdowns were.

Nausheen Ahmad, the Pakistani bank’s company secretary, said in a statement that despite HBL’s “sincere and extensive remediation measures, DFS is still not appreciating or recognizing the significant progress that HBL has made at its branch in New York.” She went on to reveal that DFS “seeks to impose an outrageous civil monetary penalty of up to $629,625 million.”

The Pakistan bank said it will “vigorously contest” the fine in U.S. courts and that there will be no “material impact on HBL’s business outside of the United States.” Habib Bank has submitted an application to DFS to shut its New York operations.

In 2016, DFS “identified significant breakdowns” in risk management protocols at the New York branch of the National Bank of Pakistan, which was given 60 days to create an improved monitoring and oversight proposal. That bank still has a New York branch.

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